HANOI, Feb 11 (Reuters) – Vietnamese police have detained two former Ho Chi Minh City officials over accusations they received bribes from Japanese contractors in an affair that has led Japan to suspend official aid.

Anti-corruption police have charged the former head of the city’s East-West Highway project, Huynh Ngoc Si, with “abuse of power” and searched his house on Wednesday, the government said in a report on the case.

Si’s deputy, who was also detained on Wednesday, faces similar charges, it said.

Vietnamese police launched a criminal investigation last December after Tokyo, Vietnam’s biggest aid donor, suspended its assistance. The Japanese foreign ministry said in December that new loans had been suspended since August.

The government report, citing files sent from a district court in Tokyo, said Japanese executives from a Tokyo-based consultancy bribed Si with a total of $2.6 million in return for consulting contracts in 2001-2003 on the $660 million highway project that used about $428 million in Japanese loans.

“Vietnam is resolved to clarify the case according to the law in order to bring it to justice and will not let any specific case affect the good relations between the two countries,” Vietnamese President Nguyen Minh Triet said on Wednesday in a meeting with Japanese Special Ambassador Sugi Ryotaro.

Ryotaro has told Prime Minister Nguyen Tan Dung the Japanese government was hoping to resume aid to Vietnam by April. (Reporting by Hanoi Newsroom; Editing by Alan Raybould)

Vo Hong Phuc, Minister of Planning and Investment in Vietnam and Consultative Group co-chairman, left, listens as James W. Adams, vice president of the World Bank and Consultative Group co-chairman, right, speaks during closing session in Consultative Group Meeting in Hanoi, Vietnam, Friday, Dec. 5, 2008. (AP Photo/Chitose Suzuki)

HANOI, Vietnam (AP) — International aid donors pledged $5 billion in low-interest loans and grants to Vietnam on Friday, with the total falling slightly from last year because Japan has frozen aid until the communist country takes effective measures to tackle corruption.

Last year, donors pledged $5.4 billion in official development assistance to booming Vietnam, which has recorded economic growth of at least 7 percent annually over the past decade.

On Thursday, Japan, which has provided more development aid than any other country to Vietnam, said it would make no new loans to Vietnam next year.

The announcement came after four Japanese executives pleaded guilty last month to paying $820,000 in bribes to a Vietnamese official overseeing a highway project in Ho Chi Minh City, the country’s southern commercial and financial hub.

Tokyo has said it would only resume providing aid to Vietnam when effective anti-corruption measures are in place.

Other donors also raised concern about corruption, as well as the recent arrests of two Vietnamese journalists.

“The events of the last six months have raised concerns with respect to whether the media is being encouraged to actively report on corruption within the government,” said James Adams, vice president of the World Bank.

Minister of Planning and Investment Vo Hong Phuc replied that the journalists “were arrested for breaching laws, not because they were fighting corruption.”

Phuc praised international donors for their support in the face of a deepening global economic downturn.

“In spite of difficult times and the financial crisis, most countries have increased their aid commitment to Vietnam,” Phuc said. “This reflects the donors’ support for the policies of the Vietnamese government.”

The World Bank became the largest aid donor, with a pledge of $1.66 billion, and the Asian Development Bank pledged $1.57 billion. The European Union will give $893 million.

Over the past three years, donors have pledged a total of $13.6 billion in development aid to Vietnam, of which over $6 billion has been spent, mostly on infrastructure projects, according to the government.

Vietnam’s leaders need to urgently tackle corruption, which is putting economic growth at risk, an economic expert has warned.

Harvard Business School Professor Michael Porter said a strong press was a key plank in exposing and preventing corruption.

“Corruption could make any country’s progress come to a complete stop,” Porter told the Global Competitiveness and Competitive Advantages of Vietnam conference in Ho Chi Minh City on Monday.

The country has experienced impressive growth over the last two decades, Porter said. However, reforms so far have not been enough to lift Vietnam to the middle income economy bracket.

The reforms implemented over the next couple of years will determine whether the country will follow the experience of the Republic of Korea or the Philippines, he said.

South Korea had a nominal annual per capita income of US$20,015 in 2007. In the same year, the Philippines had a per capita income of $1,626 and Vietnam $829, according to International Monetary Fund estimates released last month.

Porter said every country’s competitiveness depended on its efficient use of human capital, cash and natural resources.

According to the Global Competitiveness Report 2008, Vietnam’s global competitiveness index score was -0.35, with the nation’s monthly minimum wage at about $50.

Vietnam fell two places to 70th in the 2008 Global Competitiveness Report, chaired by Porter and released in October by the World Economic Forum.

A series of experts have identified the key barriers to Vietnam’s economic growth as high inflation, poor infrastructure and a lack of skilled laborers.

Porter said the current global economic downturn meant Vietnam should set its key priorities as reducing corruption, improving infrastructure and improving the skills of its workforce.

He said the government also needed to urgently introduce the financial market reforms that were part of Vietnam’s World Trade Organization (WTO) commitments, as well as reform state-owned enterprises.

The more important thing was for all levels of government to commit to the same agenda, he said.

Too many levels of government in Vietnam was also holding back development, with each locality working on its own programs, Porter said on the sidelines of another seminar in Hanoi Tuesday.

Economists and policy-makers, including Deputy Prime Minister Hoang Trung Hai, also attended the Country Competitiveness Discussion in Hanoi.

Some attendees at the HCMC conference on Monday said the government had made a good start in tackling corruption.

“I do believe the government here is on the right track to fight corruption despite lots of work needing to be done in the time ahead,” Bo Eklund, Danish businessman and general director of private equity fund management company FMS Vietnam, told Thanh Nien Daily on the sideline of the seminar.

In the long term, Vietnam could focus on agricultural development to turn itself into one of the world’s largest suppliers of food and foodstuffs, Porter said. Alternatively, the country could invest in warehouses and seaports to become a leading global cargo transit center.

Do Xuan Quang, managing director of freight forwarding company Vector Aviation, said Porter’s proposal for Vietnam’s competitiveness plan should guide the nation’s policymakers.

“Porter’s competitiveness action agenda for Vietnam sounds great but the issue is how we will implement it,” said Pham Chi Lan, vice president of the Institute of Development Studies.

HANOI (AFP) — An appeals court in communist Vietnam on Thursday upheld a blogger’s two-and-a-half-year jail sentence for tax fraud in a case media watchdog groups have said was politically motivated.

The Ho Chi Minh City People’s Court confirmed the September verdict and sentencing of Nguyen Hoang Hai, who uses the weblog name Dieu Cay and is a member of the online Free Vietnamese Journalists Club.

“After several hours of debate with his lawyers, the court upheld the first instance sentence of two-and-a-half years imprisonment for Nguyen Hoang Hai on the charge of tax fraud,” court official Phan Tanh told AFP.

Hai — who has taken part in anti-Beijing demonstrations about a sensitive sea territory dispute with China — was arrested in April, days before the Olympic torch passed through the southern city, formerly called Saigon.

“The authorities are trying to silence this blogger,” said media rights watchdog Reporters Without Borders (RSF) in a statement before the hearing.

“Dieu Cay should be freed at once,” said the Paris-based group which has called the weblog writer a “cyber-dissident.”

“We call on the foreign embassies in Vietnam to defend free expression by urging the Vietnamese government to release him.”

RSF said that, according to Hai’s son, he had been under close police surveillance since joining street demonstrations early this year against China’s claim over the Spratly and Paracel Islands.

The protests backed the government stance that the islands belong to Vietnam, but they also embarrassed the leadership which received a stern rebuke from China for allowing the rare street protests to take place.

“The police are harassing his family, his property has been seized and close colleagues have been threatened and arrested,” the RSF said.

Vietnam will issue new rules against “incorrect information” on blogs this month, state media reports said this week, quoting government officials.

The regulations aim “to create a legal base for bloggers and related agencies to tackle violations in the area of blogging,” said Information and Communication Deputy Minister Do Quy Doan, according to the Thanh Nien daily.

The ministry “will contact Google and Yahoo! for cooperation in creating the best and the healthiest environment for bloggers,” he reportedly added.

HANOI – JAPAN’S ambassador to Vietnam on Thursday said his country had suspended new aid loans to Hanoi, citing a major corruption scandal that came to light last month.

The move came after former executives of Pacific Consultants International (PCI) last month admitted in a Japanese court to paying kickbacks to a Vietnamese official overseeing a Tokyo-funded road project.

Ambassador Mitsuo Sakaba told an international donors’ meeting in Hanoi that ‘we are unable to pledge new yen loans’ until both countries work out ‘effective and meaningful measures against corruption.’ Japan is Vietnam’s biggest bilateral donor.

‘Following the grave incident, the two governments set up a joint committee to discuss concrete measures to be taken to prevent corruption relating to Japan’s ODA (official development assistance) to Vietnam,’ he said.

‘Until effective and meaningful measures against corruption be worked out through this joint committee, it would be difficult to regain the support from the Japanese public for further assistance to Vietnam, and we are unable to pledge new yen loans.’

Japan last year gave more than a billion dollars in ODA to Vietnam and has been studying several major infrastructure projects, including a new north-south transnational railway and highway and a high-tech industrial park. — AFP

Reporters Without Borders calls on the Vietnamese authorities to stop manipulating the legal proceedings against blogger and human rights activist Nguyen Hoang Hai, better known by the blogging name of Dieu Cay, who is serving a 30-month jail sentence on a charge of tax fraud.

Foreign journalists will not be admitted into the Ho Chi Minh City courtroom when his appeal against his 10 September conviction is heard tomorrow.

“The refusal to let foreign journalists cover the hearing, which is supposed to be public, is indicative of the way these proceedings have been conducted,” Reporters Without Borders said. “The appeal court has also violated the right of defence by giving his lawyers less than two weeks to prepare for the appeal hearing. All this shows that the authorities are trying to hide the fact that Dieu Cay was convicted on a trumped-up charge.”

Dieu Cay’s lawyers and family, including his ex-wife, were notified on 25 November that the appeal was to be heard in nine days’ time. This violated article 242 of the Vietnamese code of criminal procedure, which says the defence must be notified 15 days in advance to allow it time to prepare. The code has been in force since July 2004.

His lawyers requested a postponement of the hearing but the appeal court’s judge refused and told one of the lawyers that “even if the defendants and their lawyers are not in the room, we will examine the case.”

Dieu Cay’s tax fraud conviction was based on the allegation that he had not paid any taxes for the past ten years on premises he owned, when in fact he rents the premises from the Hanoi Eyewear Co. under an arrangement allowed by the law in which the company assumes responsibility for paying the taxes.

“The authorities are trying to silence this blogger,” Reporters Without Borders said. “Dieu Cay should be freed at once and the charges against him and his ex-wife should be dropped. We call on the foreign embassies in Vietnam to defend free expression by urging the Vietnamese government to release him.”

Dieu Cay was arrested in Ho Chi Minh City on 19 April and was charged with tax fraud five days later. According to his son, he had been under close police surveillance since taking part in demonstrations in Ho Chi Minh City at the start of the year in protest against China=s claim to sovereignty over the Spratly and Paracel Islands. The police are harassing his family, his property has been seized and close colleagues have been threatened and arrested.

A founder member of a group of bloggers known as the Free Vietnamese Journalists Club, Dieu Cay is one of the country’s best known activists. The US-based Vietnam Human Rights Network (VNHRN) awarded him a prize on 29 October for his commitment to free expression.

Vietnam is on the Reporters Without Borders list of “Enemies of the Internet” and its Internet censorship practices are almost as thorough as those of its Chinese big sister. Deputy information minister Do Quy Doan told the local press on 2 December he intended to “issue guidelines on the distribution of information in blogs.”

The Thanh Nien daily newspaper meanwhile reported that the information ministry planned to “contact Google and Yahoo! about cooperating in the creation of the healthiest and best possible environment for bloggers.”

VietNamNet Bridge – The British government has pledged to give non-refundable aid of 50 million British pounds (roughly 74.5 million USD) to Vietnam next year in spite of global financial crisis.

Head of the UK’s Department for International Development in Vietnam Fiona Louise Lappin said on December 2 that the sum is part of a ten-year development partnership between Vietnam and the UK.

The UK is one of countries soon announce their aid pledge to Vietnam ahead of the Annual Consultative Group Meeting 2008 scheduled for December 4 and 5.

The poor will still be one of top priorities in the UK-funded projects, Lappin said, adding that “It is key at this point in time that Vietnam takes steps to protect the poor”.

Over the past three decades, over 35 million people have escaped from poverty, however, there still have 18 million very poor people and low income families who need to be protected.

While praising Vietnam’s poverty reduction, Lappin warned that Vietnam is not likely to reach its two Millennium Development Goals of sanitary and HIV/AIDS in 2015, especially when foreign aid to the areas will be reduced as Vietnam becomes a medium-income country.

She called on the Vietnamese government to prepare its budget for the areas. The Head of DFID Vietnam also urged the Vietnamese government to increase its anti-corruption efforts, saying “Different ways of being corruption require different strategies to tackle.”

She also expressed her support to Vietnam’s anti-corruption policy and called for supervision mechanism on how effectively the policy works.